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US stocks yesterday celebrated the start of a new quarter, rallying as the Lehman Brothers equity offer drew a warm reception, fueling the Dow to its eighth-biggest point jump ever.

Jeffrey Kleintop, chief market strategist at LPL Financial Services, said: "Clearly there is a recognition the credit markets are healing—usually stocks begin to rally about six months before the end of a slowdown."

"And with earning season less than a week away, and we haven't heard a flood of negative pre-announcements," Kleintop said.

The Dow industrials climbed 391.47 points, or 3.2%, to 12,654.36, with all 30 components ending higher, with shares of Citigroup leading the way, up 11.3%.

The stock indexes solidified gains in the wake of US economic data that showed the Institute for Supply Management's index inching up to 48.6% in March from 48.3% in February, topping the forecasts of analysts looking for it to slip to 47%.

The early economic data fostered the sentiment that says, " 'Hey, we're not falling through the floor on economic data,' " said Bill Stone, chief investment strategist at PNC Wealth Management.

"You'll probably continue to see weak economic data, but that doesn't necessarily doom you to poor stock-market returns."

The broad-based rally lifted nearly all sectors, with the Amex Securities Broker/Dealer index among those tallying the largest gains, along with the S&P Bank Index.